Founders and intellectual property assignments

In the excitement of issuing initial shareholder agreements, founders often times forget a document: the intellectual property assignment agreement.

An intellectual property assignment agreement requires founders to assign over any claims they may have on the startup intellectual property to the Company itself.

Absent such an agreement, a founder who leaves the Company could claim that he or she actually owns the contributions made to the Company – not the other way around.

In fact, if there is uncertainty as to who owns the intellectual property, a clever founder may be able to even ask the Company to buy the intellectual property upon departure, in exchange for a full release of claims and a promise not to sue the Company for infringing on the founder’s intellectual property!

There are some very concrete steps a Company can take to avoid this situation:

(1) In the shareholder agreements, the Company should include clauses that (a) require the founder to assign over intellectual property and (b) require the founder to take further steps as needed to help the Company perfect the transfer of intellectual property to the Company (a “further assurances” clause).

(2) In addition to the shareholder agreements, the Company should also draft and have all founders sign a robust intellectual property assignment agreement that affirmatively transfers the intellectual property to the Company and contains another further assurances clause.

(3) If and when founders sign additional agreements with the Company, such as employment or executive agreements, the Company should also make sure such agreements repeat the refrain that intellectual property will be transferred to the Company.

Having different agreements that provide for intellectual property assignments may seem like overkill, but it really isn’t – a founder who leaves the Company, and who never signed anything related to intellectual property, may have a claim that the Company needs to pay him or her for the intellectual property transfer upon departure.